Over the years many friends have asked whether their business idea is a good one or not. I always wind up running the numbers and looking at a few scenarios with them. Sometimes things look good, sometimes not so much. I’m no guru and I don’t host Shark Tank, I’ve just gained a reputation among friends for actually digging into this stuff and enjoying it. When I started seeing the same questions come up on the Q&A site Quora, I thought I’d dive in.
Is it profitable to start up and run a portable sawmill business? I’m interested in making and selling slab tables from salvaged tree trunks.
You’re interested in making and selling slab tables from salvaged tree trunks. If you want to make a sustainable business then, like any business, you’ll need to find customers: folks who want to purchase slab tables made from salvaged tree trunks for a price that is greater than your costs. You’ll also need equipment, materials, and labor to fulfill that demand.
Let’s start with the most important factor: customers.
There’s no Field Of Dreams
Unlike the Kevin Costner movie, it’s extremely rare that anyone creates something that there’s no actual demand for. By actual demand I mean you know people who will hand you money in exchange for your goods. Most folks who make anything don’t just make their goods and then put a sign out that tells the neighborhood “Hey! I sell furniture, check it out!”
You need customers.
Drum-up some business. Start asking people about their patio table, their kitchen table, the table in their office if they’re a business owner. What do they like about it? What don’t they like? Figure out their furniture choices and pitch to that angle – this is selling. Maybe a big slab table would dominate the conference room. Maybe it would spruce-up (no pun intended) the kitchen. Find folks who are interested. Ask them why they don’t have a slab table. What’s stopping them from getting one? Cost? Appearance? Quality? Time? Do they want something custom? This is you finding your value drivers and differentiators – the things that bring value to the product and the things that set you apart from the other builders.
How do you sell anything without having something to show them? There are many ways. You can tell a story so the person paints a picture in their mind. You can whip out a pencil and paper and start sketching. You can pull up pictures of salvaged tree trunks that have been turned into tables. You can pull out a catalog of slab tables and point out how yours will be better.
You think you need a table ready to go right now? You don’t. It might help with some sales, but it’s not a requirement. The requirement is convincing them you will make an amazing final product. You’re just starting out. Ask for a couple of days to get them a quote, take down their information if you don’t have it already, and go on to the next person. Line up 7 to 10 customers. You have to assume some will drop off the list either due to your price, time to delivery, or some other constraint, and you probably want to line up just 3-4 tables for immediate (30-day) delivery since this is labor-intensive and detail-oriented work. You don’t want to overextend yourself.
Now that you’ve got some potential customers, it’s time to get them a quote. You don’t need to buy anything yet, but to determine an end price to your customer you first need to figure out what it will cost to manufacture your table.
Since there is a known market for this product, you can technically jump ahead to producing a few tables and bringing them to market. Personally, I’d pre-sell, because it means I get to immediately recoup my costs of entry into the business.
Which is better or easier is up to your own skills and choices. You can spend your money or credit to buy the equipment, invest your time and labor, and then try to recoup all that by making sales. Or you can sell ahead of time, buy the equipment with someone else’s money, and invest the labor knowing you’ve already got customers waiting for delivery.
OK. Remember we’ve still got to get quotes out the door and to do that we need to determine your costs. I’m working in US dollars since that’s the market I know.
What things make up your costs?
Start small so you aren’t taking on big risks right at the start of your new business. If your work is successful, you can then reinvest some or all of your profits into more/better equipment, extra workers, etc.
Portable sawmills can be as small as 12″ guides on hooks that clamp onto timber, to 30″ chainsaws rigged up to guide rail systems, to trailer decks with V-twin or larger engines that will cut a 100′ L x 40″ W x 4″ H or even larger slab in a single pass. Since you’re getting started, I’d go with the chainsaw rig. Keep in mind that kitchen tables are normally 36–44″, so you’ll be cross-cutting. That means a chainsaw with a bar that is at least as long as half the width +1″. 44″ in half is 22″, +1″ for cross cuts is 23″, and lucky for you there are plenty of quality chainsaws with 24″ bars and up. Now, most chainsaw rigs at the big box stores max out at handling 30″ diameter timber, which means you should make your own rig. It’s cheaper and it’s also better to make something customized to your own needs. Here’s ato making your own chainsaw rig. Add misc parts and tools like oil, chains, chain lube, a cheap straight ladder to use as a guide, and borrowing some tools to make the rig, and you’re around $1000 with most of that budget going to the quality, brand, and bar length of the chainsaw.
Add a log hauler and/or timberjack, safety gear, a trailer to tow the rough cut slabs, and you’re at another $500–1000, again depending on brands, quality, and so on. If it’s me, I’m foraging on a classified ads site likefor tools.
You’ll also need finishing tools. You can get large and level hand planing tools if you want to put the sweat into it, but a $150–200 router is going to work a lot faster on table-sized slabs. You can build a planing rig for your router out of lumber and screws. There are videos on YouTube of this setup,to get you started. Notice the protective gear as well. Different stuff than the logging gear. You’ll need a couple of chisels and hammers for rough work like bark removal. A belt sander with and a few different grit levels. A good drill and bit set, a couple of wrenches, and a ratchet set will make quick work when the time comes to do the frame (legs, braces or cross-braces, joints, etc).
I think you’re looking at a $2500 budget all-in and that’s for store prices. It’s less if you buy secondhand tools from local ads and sites like Craigslist. You might also have a bunch of these tools already, or you can borrow from family & friends. Again, don’t buy anything right now, but start making a list of your equipment needs and prices.
Salvaged tree trunks, like other salvaged natural goods, range in price from free to holy crap. The difference between those two usually comes down to where you are in the world, your negotiating skills, and how much time you’re willing to put into sourcing your materials.
One option is to ask friends and family if they have any 36-44″ diameter logs or trees in their yard that they want to get rid of. Maybe they can’t afford a professional or just haven’t gotten around to it. You can do free log removal or tree felling in exchange for their help with the labor. Just make sure the timber is long enough too – you don’t want something 4′ long unless you’re only making coffee tables! 7′ is a good length.
A better option is to sift through local ads and find people who are willing to pay for log or tree removal. Depending on where you are in the world, cutting down even 1 tree can require a license or insurance so you might have to stick with log removal. The point is to look for opportunities where people will pay you to collect the materials you need. If you find this, you’ve hit the jackpot, and you can jump straight to the next section: Labor.
If you don’t have friends\family you can get materials from, and you don’t hit that jackpot, it’s time to contact local tree removal companies. Ask to speak with the owner or the business manager. “Hi, I’m (name). I’m a local business owner in (town) and I’m looking for a timber supplier. I’d like 2 minutes of the owner’s time if he or she is free.” Assuming you get the owner on the phone, or in person, you need to ask two questions: first, do they take trees down in pieces or do they fell trees whole; second, are they open to job site haul-offs. In other words, you show up and take some of the timber right from the job site.
The first question is because some tree removers fell trees from the base. That’s what you’re looking for. What you’re trying to avoid are the tree removers who take trees down in pieces, where they chop branches and trunk from the top-down, often in lengths of 12–20″. That’s not what you’re looking for but it’s a very common method where I live because houses here are not that far apart. Felling a 40″ diameter tree from the base adds significant risks in most urban and suburban areas. Not so much in rural areas. Again, this is why you ask the question.
The second question is because you’re looking for a supplier as you’re starting up a furniture business. Some will just come right out with a price. More on that in the next paragraph. Even though you might only start with one log at a time, you want a good rate. What you want to watch for is they could have their own milling or mulching operation, leading them to quote well over the norm, or just say “No”. Always be ready to counter-offer. “I understand. I’ll tell you what. I’m just getting started and I’m only looking for one log at a time. Probably once a month as I get going. I can show up at any job site, haul the 1 log I need out of the way, cut my slabs and I’ll clean up after myself too. I’d be saving you a little bit on labor, fuel, and tools & vehicle maintenance and we’d both get something out of the deal.” Pose it as a statement, not as a question, because it generally takes more thought to respond to a statement. If this furthers the discussion, great. If not, thank them for their time and move on to the next possible materials source.
All right so, if you’re buying instead of being paid for removal, make sure you understand market pricing for timber.regularly. You’ll need to know the term MBF, which is “1000 Board Feet” or how many 12″ x 12″ x 1″ boards could be rough cut following milling standards. There are . Say you’re quoted $400 MBF for a 40″ diameter, 8′ length log. According to the cheat sheet, that’s 648 board feet. $400 MBF / 1000 M = $0.40/bf. Times 648 board feet comes to $259.20 per log. Depending on the thickness of the slabs you’re looking to finish and turn into tables, you may get several slabs from one log or just 1 or 2. The good news is you can mill other lumber, for legs and braces, from the rest of the log, so in this example, you’re $260 all-in for wood.
Besides the wood, you need finishing materials and framing materials. Brushes, stains, and sealant – whether you want to go with lacquer, wax, or epoxy – for wood finishing. Bolts, nuts, washers, wood glue and so on for the framing. If you’re crafting made-to-order custom tables, these materials will change with each customer. Total framing and finishing materials costs are still likely to be well under $100.
Materials Note: It’s Wood, Not Feathers!
Keep in mind one other key factor in all this is weight. Logs for slab tables aren’t exactly floating away like feathers on the wind. A 36″ diameter, 7′ length white ash log. You need to make sure your truck, or the trailer and the vehicle towing it, can handle that load. You also need to make sure you can handle it! Even cutting slabs on-site, you’re talking about 84″ x 35″ x 2″ slabs that are going to depending on how dry the wood is.
Once you’ve priced materials, what comes next?
You’ve established a rough estimate of your equipment and materials costs. What’s your time worth? This is tricky for some people because they think about what they make at their current job, or what someone else makes doing something else completely. In other words, they think about it as an employee. You need to think like a business owner.
Are you going to replace your current job with a career in producing slab tables, or is this a hobby business for your spare time?
If this is going to replace your job then it needs to replace whatever you’re making now. Again going off data for the U.S., since that’s the country I know best, then according tothe average U.S. consumer spending per year is roughly $57,000. Adjust for your own circumstances and remember we’re still only putting a quote together. Is rent only $1000/mo? Great, that’s $6000 less in housing and you’re at $51,000. Eat beans and rice? Food costs are probably $2500 instead of $7000. Again, we’re just estimating. Don’t cut to the minimum, use your actual spending amounts, but minus any of these new business costs.
Let’s say you get to $50,000/yr. With U.S. taxes as a sole proprietor, you’d need about $58,000/yr to break even (again, ignoring any other business expenses which would actually reduce this, we’re going for quick math here). Coincidentally, this is roughly the median U.S. household income. To hit that, you need the equivalent $30/hr working 50 weeks a year (2 weeks off for holidays) and 40 hours a week. It’s likely you’ll work a lot more some weeks and possibly a lot less on other weeks, but remember we are just estimating costs. And again you needed to adjust for your own circumstances. If you’re a software engineer at Google making $200,000/yr and living at 3x the average U.S. annual expenditure, and you want to shift careers into table manufacturing, you’ll need to account for that.
Is this just a hobby? Then this is a different story entirely. In fact, you may not think about your time at all if you’re just making 1 or 2 tables a month during nights and weekends.
Either way, there’s a catch. You need customers to actually purchase those tables. If this is replacing your career, that is a requirement. If it’s a hobby you’ll do on the side, your time is still worth something, and you don’t need a stack of tables piling up on the lawn. It is important to keep in mind that most people aren’t buying a new couch every weekend like they might do with food or clothes shopping. A consumer buys a table and generally expects to get decades of use out of it.
That means if this is to be your career, you need to think about how many units you need to sell to meet your own living expenses. At just 12 tables or one table a month, your personal unit rate for labor would be $4,834 to match the average consumer spending rate. Can you sell 12 tables a year to make this a career? Can you sell them for at least $4,834, before factoring in equipment and materials costs? If that’s the goal, you might want toby a professional woodworker first. Not to change your mind, but to expand it and make sure you take all things into account.
On the other hand, if this is simply a hobby, think about what else you might be doing with your free time. How much would someone have to pay you to not do the thing you want to do with your free time and build a table instead?
Adding It All Up
Let’s make some assumptions so we can have a single frame of reference to work from. You will be making 7′ L x 36″ D x 2″ H kitchen tables and you can build 3 full tables per log. You partner with a local landscaping company and will pay their wholesale pricing in exchange for telling customers you only use their timber. Figure you can sell one table each month. We’ll look out over the span of 12 months, as a trial run, to see if this business works. Finally, let’s assume that, wherever you live, your spending matches the U.S. consumer average.
$2,500 for equipment
$1,440 for 4 logs and all finishing materials
$500 for misc. business expenses (incorporating, filing taxes, etc.)
$50,000 in annual living expenses, plus taxes, or roughly $58,000/yr
Comes to $62,440 total for the year to do this as a career. Remember this includes housing, food, transportation, utilities, entertainment, clothing, health insurance, and more! It’s the whole package, a whole new career as a professional table builder.
Given these assumptions what would you need to quote, per table, to do this as a career and be your own boss?
If you can sell 20 tables, that drops to $3122 per table. But you’d better sell all 20.
If you want to do this as a hobby on the side, where you keep your existing career and thus you only worry about equipment, materials, and the opportunity cost of your time (again, how much someone would have to pay you to build a table instead of, I don’t know, going kite flying or watching Netflix all weekends), it’s a totally different ball game. Your job can keep paying the bills while your hobby can supplement your income.
As a hobby, your costs are only $4,440 total or $370 per table. Why the huge difference? If this is a hobby, you wouldn’t be replacing your career with it. If you value your weekends at $500 and only want to give up one weekend each month to this hobby, you would need to sell each of your twelve tables for $870. You’d take home an extra $6000/yr before any taxes. You’d still have the other 40 weekends to yourself, too.
We Still Haven’t Really Talked About Pricing
Now that we have our costs, what do we actually quote out to those customers, isn’t that what this whole exercise was about?
For that, we need to also determine what the fair market value is for our tables. If the fair market value is $5,205 then we’re all set and we can just quote $5,205 a table. If it’s anything under that, we’ve got a problem. One of the best ways to determine fair market value in an existing market is by looking at what other similar products sell for. Sifting through sites like Google Shopping, Etsy, and Ebay, there are wood slab kitchen tables going for anywhere from $1,000 to way over $5,000, but $3,500 stands out as a pretty standard price. Let’s call that the fair market value.
So, we have a problem. What can we do? We can:
- Sell more tables at $3,500 each.
- Sell our tables at a higher price to support our costs.
- Reduce our costs to fit the $3,500 per table price.
I’m not going to deep-dive into each of options #1 through #3. Instead, I’m going with “Other”. I’ll explain more after we talk about our risks. Before I get there, you might be asking where the option is for competing on price, thinking that’s going to get you a bunch of customers. I would stay away from that type of thinking. Once you compete on price, you will find yourself going lower and lower as someone will always want a discount or a competitor with some edge will always beat you out.
If it’s me, I’m not competing on price at all, I’m starting right at $3,500. Instead of competing on price, I’d be competing on understanding what you as a customer want in a slab table and bringing that to life when I build it for you. Then I’d be competing on sturdiness, durability, extreme attention to detail, and all the other attributes a great woodworker can bring. By doing this, I avoid underpricing my tables because underpricing is a huge risk in every business. Let’s say I cut the price to $2,500 a table. I now have to sell 26 tables to meet or beat my goal of $62,440. That’s more than double the customers and time investment.
Alright, so before we get to that “Other” option, what are our risks?
The biggest risk in this business isn’t the equipment. After selling two tables the rest is gravy and you can also change directions, using the same equipment for other businesses. It’s not materials since, barring certain parts of the world, you can find different species of tree with 36″ or larger trunks, or you can buy it wholesale. The biggest risk goes back to what I said about furniture a little while back. A person buys a slab table and they expect to get decades of use out of it. Maybe a whole lifetime. Maybe even generations of lifetimes. You’re limited to finding new customers for every sale, which is one of the least-desirable types of business to be in.
Think about it this way: my wife’s got a gorgeous glass-top wrought-iron table from her late grandmother. It’s in the same condition it was in when it was first purchased back in the 1950s or ’60s. Now to be fair, that’s glass and iron, not wood. But, I can point to the beautiful – and wooden! – dining room table my best friend has and it’s got the same story in that it was passed down from his father’s father to him. 60 or 70 years after the initial purchase it’s still in outstanding condition and still bringing families together for dinner and for holidays.
This risk is one more reason why I’d avoid diving into this business full-time from day one. I wouldn’t try to sell more tables or reduce my costs. Remember what I said earlier? I’d go with the “Other” option.
“Other” – Start This As A Hobby Business
Going strictly by the scenario in “Adding It All Up”, we saw this wouldn’t really work as a full-time business without some major adjustments to our pricing or our costs. Starting up as a hobby, on the other hand, is absolutely doable. It turns out this hobby also happens to bring with it the potential for an extra $37k a year after costs and before taxes, for 12 weekends of work.
That’s a really attractive hobby if we can find a dozen customers a year. If our main risk hits us hard, then even at just 5 or 6 customers a year, this hobby-biz is nothing to sneeze at. What’s better is that, at $4,440 in costs, the first two tables you sell at $3,500 cover the next eleven, with $2,500 left over. That’s a highly-profitable hobby, assuming you can get customers! If not, no amount of effort in the world will matter, you’ll just have wood piling up in the backyard next to all your unused tools.
Let’s say you do find the customers in year 1. How can you make things easier in year 2 and beyond so that you can successfully move into this full-time? You could spend some of that $37k on better tools or higher-quality finishes. What I’d be doing instead is spending it on finding more customers. The risk I shared earlier, combined with being just one of tons of producers in this market, means lining up a solid stream of new customers is your top priority. Alternatively, consider shifting some of the money into finding customers for adjacent markets. In other words, what else do the folks buying your tables need? Chairs? China cabinets? End tables? Bookshelves? You’ve already got some of the woodworking tools and, more importantly, you’ve already got some customers and some product to show, making your initial move into the marketing and selling of those products that much easier.